White House National Economic Council Director Kevin Hassett has issued a partial mea culpa after branding a Federal Reserve research paper the “worst” in the institution’s history and suggesting its authors deserved discipline.
The drama kicked off when the New York Fed dropped a study showing that American businesses and consumers are shouldering roughly 90% of the costs from the latest round of tariffs, rather than foreign exporters footing the bill as often claimed.
Hassett, appearing on CNBC’s Squawk Box, didn’t hold back. He declared the paper an “embarrassment” and the absolute low point in Fed publishing history, then floated the idea that those responsible should face consequences for what he saw as partisan-flavored analysis unfit for Econ 101.
Markets barely blinked, but economists everywhere raised an eyebrow high enough to hit the ceiling. Suggesting discipline for researchers whose data doesn’t align with the administration’s preferred narrative? That’s the kind of move that makes independent institutions nervous and late-night comedy writers reach for their notepads.
The backlash arrived swiftly, as one might expect when someone takes a swing at the Fed’s independence and academic freedom in the same breath. Hassett, perhaps after a cooling-off period or a strongly worded text, walked back the discipline part. In a statement shared on economist Laurence Kotlikoff’s Substack, he expressed regret for suggesting punishment and formally retracted it.
He stood by his frustration over the Fed wading into politically charged territory beyond its core monetary-policy lane, but conceded that the central bank’s independence covers its research choices too. On Fox Business shortly after, he described getting “a little emotional” on CNBC without fully retracting the call for focus on core duties.
The episode highlights the delicate dance between White House messaging and independent analysis. When a study lands inconvenient facts—like tariffs acting more like a domestic sales tax than a foreign bill—tempers can flare faster than inflation data.
Hassett’s quick pivot reminds everyone that even top advisers occasionally remember the value of a well-timed backpedal. In the world of tariffs, where costs sneak onto shopping receipts rather than foreign ledgers, the real discipline might just be sticking to the numbers without the side of drama.
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